How To Buy Commodities Futures – The Chittagong Stock Exchange (CSE) plans to launch the country’s first futures market with the aim of reducing the price gap between what consumers pay and what producers get.
Those with knowledge of what is happening say the opening of this market could enable consumers and producers to buy and sell goods at competitive prices and reduce the problem of corruption in the markets, which is said to be rife in the country.
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“Our producers complain that they are not getting good prices while consumers are paying more. Such differences can be eliminated through exchange of goods,” said Shaikh Shamsuddin Ahmed, commissioner of the Bangladesh Securities and Exchange Commission (BSEC).
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Sometimes farmers throw away their potatoes, tomatoes and other agricultural products because of the low prices resulting from the markets not working well.
To make the markets work and to ensure export and import of the country, it is necessary to change products in Bangladesh, he said, adding that BSEC was planning the future market for this.
A commodity exchange is a legal organization that sets and enforces rules and regulations for trading commodity contracts and investment-related products.
Instead, they trade futures contracts, where the parties agree to buy or sell an amount of goods at an agreed price, regardless of what is sold on the market at a specified expiration time.
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According to experts, the commodity exchange allows farmers to hedge prices using forward contracts. This also reduces the risk of a sharp price drop.
Bartering helps increase farmers’ income as it helps them get money without interest. As a result, they do not need to borrow at high interest rates from banks or lenders.
To launch the market, the city’s ports department is scheduled to sign a memorandum of understanding (MoU) with the Multi Commodity Exchange of India (MCX) tomorrow to appoint them as advisors.
MCX will promote rules and regulations based on compliance with international standards, products, cleaning and processing methods, trade and monitoring systems and warehouses, transportation areas and types of cooperation.
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It will also recommend pricing strategies, local pricing and the operation of a pricing advisory committee; use third party data and active market processes; educate market partners; and create an integrated five-year business plan.
MCX will share sample business rules so that CSE can develop or modify their own to speed up the process.
In Bangladesh, the government took the initiative to start the transformation of products in 2007. However, this program was not implemented due to the difficulties of stocks and the lack of suitable suppliers, said AB Mirza Azizul Islam, who was the financial adviser to the interim government . .
The CSE, which got the first nod to implement the reforms from the BSEC last year, is expected to roll out the changes within the current year. BSEC intends to start including gold, industrial products like steel and agricultural products namely tea to the exchange.
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The Director of BSEC, Mr. Ahmed, says there is a global demand for other agricultural products such as tea and jute and the use of this money, even if exported, enables farmers to get good prices.
“Some of our key products are imported by a few companies, so prices and quality are determined by their practices,” he said.
Bangladesh’s demand and imports are so large that they sometimes continue to affect commodity prices at the Chicago Board of Trade (CBOT), he said. CBOT is the largest stock exchange in the world founded in 1848.
Like any developing country, Bangladesh needed such a change in its capabilities to have a viable commodity market in the region.
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The first known futures exchange is the Dojima Rice Exchange, founded in Japan in 1730 for the purpose of trading rice futures.
Africans trade only in agricultural products, while Indians trade in a wide range of commodities, including cash crops, food grains, plantations, spices, oilseeds and metals.
Pakistan’s currency trades in gold, cotton, yarn, sugar, rice and wheat, while Nepal allows trade in cash crops, food grains, vegetables, spices, oilseeds, iron and steel.
Bangladesh imports a lot of goods, so the exchange of goods prevents inflation, said Sadeq Zaman, associate director of PwC Bangladesh.
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“Since MCX has a lot of experience and a similar financial situation, their merger will be of great benefit to us,” he said.
The purpose of the market is to reduce the price gap between the end consumers and the producers end, said Md Ghulam Faruque, Acting Director of CSE.
It will also help to find the future price so that the producers will be able to see the future price of the product. “So when agricultural products are part of the exchange, our farmers benefit.”
“The MCX team will work to find out what products are possible for our market. Then we will think about the final products,” Faruque said.
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The market will run on a non-cash processing basis, so warehouse facilities are not required, he said, adding that the CSE would need more IT infrastructure to implement the changes.
“People have little knowledge about it, so technical knowledge is also important. We will provide training to our colleagues using MCX.”
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The volatility of the markets in recent months has put an important focus on the future. It’s another way of looking at how people view the health of the economy. But what?
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First look into the communal kitchen and fridge: wheat, flour, rice, sugar, soya oil, corn, milk and beef – all the most important agricultural products at the heart of the dinner table and the market of the future. The concept of futures began 200 years ago as a way for farmers and traders to protect themselves against the wildly fluctuating prices that characterized food production in the 19th century. In futures trading, the buyer and seller lock in a price by sending a small portion of that amount (initial margin) to enter into an agreement to make a delivery or settle a contract with money at a fixed future time. Eventually people realized that the contract itself had value and could be bought back and sold by setting the margin. In this way, futures have become a very profitable option for those who do not want to buy bulls of grain or herds of cattle to speculate on future price movements.
Today, the same market has become a multi-billion dollar global business. Six days a week, almost 24 hours a day, millions of dollars in futures from corn to copper to the S&P 500 stock indexes exchange hands. When you look at S&P futures, you’re only looking to see how much demand there is at that time for contracts that will pay if the stock market goes up (or down) at some point in the near future.
Futures are a way for traders to express their analysis of market movements. Futures contracts are leveraged and therefore carry more risk than your original investment, but at their basic level they are a cheap way to hedge or gain greater exposure to futures markets.
Few home cooks can take their frozen food and turn it into a five-star meal, but future entrepreneurs may be surprised by what they can do with the products of the future. , following strong demand from trading members, the market regulator SEBI (Securities and Exchange Board of India) has approved trading options in commodities (futures). In October 2017, options on gold futures (1 kg lot) were approved, making it the first option for trading on Indian exchanges. But what is a commodity trading option or commodity option?
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An option is the right (and NOT an obligation) to buy or sell an underlying security at a specific price also called the strike price on a specific date, which is the date the contract expires. There are two types of options – American and European options – based on when the right to sell or buy can be exercised. While in American options one can exercise his buy or sell before his time expires, in European options one can only exercise the right on the exact day which is the day the option contract expires. In India, only European options are traded and option contracts expire on the last Thursday of every month.
In option trading, the risk is limited to the option buyer and the potential profit is unlimited. This is because the chosen consumer can choose to train his body
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